Eli Lilly deal for Point puts radiopharma names in spotlight

Radiopharma names are in the spotlight on Tuesday morning after Eli Lilly (LLY) announced a definitive agreement to acquire Point Biopharma (PNT) for a purchase price of $12.50 per share in cash payable at closing. The news also sent Lantheus (LNTH) higher as it holds a worldwide license for Point’s 177Lu-PNT2002 for the treatment of metastatic castration resistant prostate cancer.

POINT BIOPHARMA DEAL: Eli Lilly and Point Biopharma announced a definitive agreement for Lilly to acquire Point. Lilly will commence a tender offer to acquire all outstanding shares of Point for a purchase price of $12.50 per share in cash payable at closing. The transaction has been approved by the board of directors of both companies. The transaction is not subject to any financing condition and is expected to close near the end of 2023, subject to customary closing conditions, including the tender of a majority of the outstanding shares of Point’s common stock, and license transfer approval from the U.S. Nuclear Regulatory Commission.

Following the successful closing of the tender offer, Lilly will acquire any shares of Point that are not tendered in the tender offer through a second-step merger at the same consideration as paid in the tender offer. The purchase price payable at closing represents a premium of approximately 87% to Point’s closing stock price on October 2, the last trading day before the announcement of the transaction, and 68% to the 30-day volume-weighted average price. Point’s board of directors unanimously recommends that Point’s stockholders tender their shares in the tender offer. Lilly will determine the accounting treatment of this transaction as a business combination or an asset acquisition, including any related acquired in-process research and development charges, according to Generally Accepted Accounting Principles upon closing. This transaction will thereafter be reflected in Lilly’s financial results and financial guidance.

Commenting on the news, B. Riley said Eli Lilly’s deal to acquire Point Biopharma validates the value of late-stage radiopharmaceuticals assets. The acquisitions further shows Lilly’s strategic interest in targeted radiotherapeutics, especially alpha emitters, which reads positively to radiopharma names Actinium Pharmaceuticals (ATNM), Fusion Pharmaceuticals (FUSN), and Lantheus, B. Riley argued.

JMP Securities also reiterated an Outperform rating and a price target of $130 on shares of Lantheus following Eli Lilly’s acquisition of Point Biopharma. Recall that Lantheus in-licensed worldwide commercialization rights for the acquiree’s PNT2002 asset for the treatment of metastatic castration-resistant prostate cancer in late 2022. The firm believes that PNT2002 could be potentially transformative for Lantheus, provided that the asset could represent the company’s first meaningful therapeutic oncology offering with biotech-pharma-line economics accruing to Lantheus. JMP believes Lilly’s purchase further validates the potential value that PNT2002 could unlock in the radiopharmaceutical arena. The deal should not alter or change the agreed upon terms of Lantheus and Point’s previous exclusive agreement as the partnership is passed along to Eli Lilly.

NOVARTIS WEIGHS SALE: Meanwhile, Bloomberg’s Dinesh Nair reported that Novartis (NVS) is considering selling part of its radiopharmaceuticals company Advanced Accelerator Applications. According to sources familiar with the matter, Novartis is in the early stages of exploring a sale of some of AAA’s diagnostic imaging assets. AAA makes radioactive drugs used to treat diseases including cancer. It also offers molecular imaging for helping to diagnose cancers, cardiovascular and neurological disorders in the early stages. Novartis agreed in June to sell part of its portfolio of eye medicines to Bausch + Lomb (BLCO) in a deal worth as much as $2.5B, the publication notes.

PRICE ACTION: In Tuesday morning trading, shares of Eli Lilly have dropped about 2% to $526.01, while Point Biopharma’s stock has soared about 85% to $12.35. Also higher, Lantheus and Fusion Pharmaceuticals have gained about 6% and 16%, respectively.